Cost sheet

Mahesh gowda

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What is Cost sheet

The purpose of cost sheet is to determine selling price per unit (S.P.P.U). At the beginning of the year. Hence who take all the cost to find cost of sales and arrive at cost per unit, to that we add profit margin and can get (S.P.P.U).
Thus Cost price + profit = selling price. OR cost price loss = selling price.

Types of cost
Direct cost
Direct Raw material consume

Indirect cost
Factory overheads

Direct labour

Administration overheads

Direct expness

Selling and distribution overheads

I. Direct cost
Direct cost is an cost related to direct production activity. Generally direct cost come in to picture in case of manufacturing activity. It is also known as prime cost

It involves 3 things
1. Direct raw martial consume. 2. Direct labour. 3. Direct expness.

1. Direct Raw material consume

This is also known as basic raw material input or input material Raw material without which the production activity cannot be stored. This raw material is required to every manufacturer in case of production activity. (making activity)

For example:

 Wood in case of furniture.  Cotton in case of cloths  Leather in case of shoes.  Gold in case of jewellary.  Steel in case of whistles.  Paper in case of note book.  Plastic in case of pen.  Fuel in case of car. Continue

Direct Raw material consume

+ + -

Opening stock of raw material. Purchase of raw material. Purchase return of raw material. Buying expenses (inward expenses) related to raw material. Closing stock or raw material.
=Direct Raw material consume

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Inward Expness/Buying Expness

Custom duty Import duty Dock charges Clearing charges Octori duty Unloading charges Buying expness/Inward expness
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Primary packing
All the expness which are incurred to save the product (protect and preserve the product in the some conditions For example: jute bag used to protect wheat, rice etc in the transport or in case of ration. Note: Primary packing can be taken either in raw material consumed or factory overheads.

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2.Direct labour
It is also known as direct wages/productive labour /productive wages It is a remuneration paid to the workers for productive activity directly related to the production. For example: any work or any manufacturing will stop in the worker goes for strike or lack outs. It is part of direct cost.

3.Direct expness
Direct expness is a part of direct cost. Direct expness are also known as chargeable expness. Direct expness are the expenses incurred in the manufacturing process to meet the specific requirement of specific customer. The product has to be carried on as per the specification given by the special customers.  The manufacturer has to incurred addition expness regard labour and material to meet the specific requirement.

II.Indirect cost
Indirect cost is an cost which is incurred and is not directly related to the production activity. Indirect cost are also known as overhead/cost burden Indirect cost includes, a)Factory overheads. b)Administration overheads. c) Selling and distribution overheads.

a) Factory overheads.
 Supervisor salary  Indirect wages  Indirect labour  Unproductive wages  Unproductive labour  Factory manager salary  Worker manger salary  Salary of watchman  Indirect material  Indirect expness  Factory insurance  Repairs and maintenance of machinery  Factory lighting and heating  Machinery upkeep  Oil/ grease/ coal/ crude oil.  Depreciation on factory assets  Depreciation on plant and machinery  Manufacturing expness  Production expenses  Power / fuel/ motive power  Consumables  Factory cleaning  Excise duty  Research and laboratory expness  Employees state insurance corporation. Continue

Factory expness are expness which are incurred indirectly to help the production inside the factory. Factory overheads is generally calculated as a percentage of direct wages.

Administration overheads
Office overheads Office on cost General expenses  Legal expenses Audit charges/ bank charges Salary on staff Administration manager salary Director fees / remuneration Printing and stationary Depreciation on office building Depreciation on office computer Rent and rates of offices Estimation expenses Stationary and consumables Postage / fax / telex  office upkeep General office manager salary
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This are amount of expenditure incurred for managing and controlling business. It is being calculated as percentage of factory expenses cost.
For example: Factory cost 5000 Administration overheads 25%on factory cost. Administration overheads=5000*25 100 Administration overheads=1250

c)Selling and distribution expenses

Selling cost Selling burden/ overheads Sales promotion expenses Advertisement Depreciation on delivery vans/vehicles Secondary packing Packing Packing material Carriage/ freight outward Commission on sale Salarys to sales staff Rent/repairs/lighting/deprecia tion of show room Depreciation of warehouse Sales of sales office Travelers salary Traveling and conveyance Loading expenses Upkeep of delivery van Sales manager salary Donation of goods Discount allowed Rent of warehouse
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These are the expenses which are incurred to induce the customer to buy our product and making product available to the customer. These are calculated at time as a percentage of sales an as a percentage of cost of sales. Any expenses related to warehouse and showroom will come in the sales and distribution expenses.

For example:
Sales is 5000 Sales overheads 25%on factory cost. Sales overheads=5000*25 100 Sales overheads=1250

Purely finance expenses

Cash discount Bad debts Bad debts written off Income tax/wealth tax Interest on capital Donation/charges Fire/penalties Bank interest Interest on borrowing/debenture/Interest on capital loan taken
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Written off
Good will written off Preliminary expenses written off Underwriters expenses written off Miscellaneous expenses written off

Dividends
Interim dividend  proposed dividend Equity dividend

Transfer
Transfer to general reserve Transfer to sinking funds Transfer to capital reserve

Loses
Losses on scrap of plant and machinery Loses on sales of fixed assets

Purely finance Income

 Profit on sales of fixed assets  Profit on sales of investment  Dividend received  Rent received  Interest on investment (Bank fund, Govt bonds, RBI)  Interest on loan given  Share transfer fees
All the above expenses and income are exhaustive list which are to be considered only for accounting purposes. For costing analyses such above expenses and income as to be excluded that means it would be forming a part of factory costing record Factory overheads non administrative factor nor selling and distribution expenses.